Banks told to work on mortgage difficulties

TAOISEACH ENDA Kenny has warned the banks they must work with customers to address mortgage difficulties.

He defended the Government’s strategy against Opposition attack in the Dáil following criticism of the banks by the Central Bank and Department of Finance for their failure in dealing with mortgage distress and for adopting a “wait-and-see approach”.

Mr Kenny said the banks were under orders from the Central Bank to submit proposals on what they intended to do. “Well, they better get up and do it now.”

He said the Personal Insolvency Bill, to come into force on March 1st, would force the banks to engage with clients.

However, Independent TD Shane Ross said that if the issue was not dealt with now the mortgage debt problem “is going to make the night of the bank guarantee look like a picnic”.

The banks were being included as part of the solution “and they should no longer be seen as part of the solution”. They had lied to the Government, to the Central Bank and to the regulator, the Dublin South TD said. “They’re lying and you can’t treat these bankers as normal human beings.”

The Government “should put the boot on the necks of the banks and give them specific instructions”.

Fianna Fáil leader Micheál Martin and Sinn Féin leader Gerry Adams said the banks would have a veto in the personal insolvency legislation, which the Taoiseach denied.

Mr Kenny said if the banks did not settle with their clients, customers would have a whole range of options under the legislation.

The row followed criticism by Fiona Muldoon, head of banking regulation at the Central Bank, who said on Tuesday that banks were behaving like teenagers when requested to deal with mortgage problems.

The secretary general of the Department of Finance, John Moran, said there had to be “much more dramatic write-off” of debt.

Mr Martin said: “It took a civil servant to say what Government has refused to say about debt forgiveness.”

Mr Adams called for action, including not applying the property tax to homeowners in negative equity. The Government had no problem in cutting home-help hours or carer’s allowance but “when banks are in crisis the Government gives them €64 billion”.

He said half of the 168,000 owner-occupier mortgages in arrears had no formal arrangement in place, and 48,000 buy-to-let mortgage holders with €13 billion of debt were in financial difficulty but the banks were not acting.

Mr Kenny said the banks had to deal with those not in a position to pay and “if the Government receives a request from the regulator that further powers are required, further powers will be given”.